India reserves $9.3 B for local defense purchases

NEW DELHI, India

India has reserved 63 % of its capital allocation in the defense budget for local procurement, the country's Defense Minister said on Monday.

Last month, India announced a total defense budget of nearly $ 65.4 billion, including a capital expenditure of 135,060 crores Indian rupee (approximately $18.5 billion).

"My Ministry has planned to invest about 63% of the outlay for 2021-22 on domestic procurement, i.e., about 70,221 crores Indian rupee [approximately $ 9.29 billion] for domestic defense procurement during for 2021-22," Singh said while speaking at a webinar organized by the Department of Defense Production and Society of Indian Defense Manufacturers.

The minister said that the increase would have a positive impact on "enhanced domestic procurement, having a multiplier effect on our industries including MSMEs [Micro, Small, and Medium Enterprises] and start-ups."

"It will also increase employment in the defense sector," he said.

Last year, India's Defense Ministry said it had bifurcated the capital procurement budget for 2020-21 "between domestic and foreign capital procurement routes." Then, it also reserved nearly $7 billion for domestic defense procurement.

"A separate budget head has been created with an outlay of nearly 52,000 crores Indian rupees [approximately $7 billion] for domestic capital procurement in the current financial year," the government said in August.

Last year, India also announced an import embargo on 101 defense items as part of the government's plan of self-reliance.

Analysts' opinions, however, are mixed on how much self-reliance India will achieve.